Triple J Farms is a beef & grain farm. They are planning on applying for a $60,000 loan to buy additional beef breeding cows to build up the beef portion of the farm. The banker insists that their balance sheet must be up to date before the loan will be considered. Triple J Farms spent the rest of the day taking inventory and gathering information on a cost basis. Create a balance sheet for Triple J Farms using the data below for December 31, 2018. Use only the assets and loans owned by this farm. Use this balance sheet to answer the questions below.

Farm Mortgage (due 4/1/19)	Current remaining loan balance (12/31/18) =$170,000 Principal payment = $20,000 Accrued interest = $7,650
Machinery	$300,000
Accounts receivable	$31,000
Accounts payable at L&L Feed Mill	$35,000
Machinery Repairs	$17,000
Cash and checking account balance	$24,000
Loan on beef cows (due 6/1/19)	Current remaining loan balance (12/31/18) =$100,000 Principal payment = $10,000 Accrued interest = $3,000
Buildings	$67,000
Sale of Market Livstock	$72,000
Prepaid expenses	20,000
Farm Supplies on hand	$18,000
Land	$318,000
Feed on hand (alfalfa, corn silage)	$70,000
Corn grain inventory	$120,000
Market Livestock	$36,000
Wheat inventory	$50,000
Titled Vehicles	$26,000
Beef breeding stock	$55,000

Other information.

1. Triple J Farms has on operating loan of $150,000 all due on 1/15/19.
2. Triple J Farms contributed $52,000 of their own cash and a $100,000 inheritance to start the business.
3. Retained earnings are equal to $536,350
4. Working capital is $162,350.

1. After bringing the loan officer a cost-basis balance sheet, Triple J Farms was told to provide the bank with a market value balance sheet. Triple J Farms returned home and spent the afternoon determining the following market values as of December 31, 2018.

Machinery	$250,000
Titled Vehicles	$20,000
Beef Breeding livestock	$85,000
Land	$520,000
Buildings	$60,000

1. Create a market-based balance sheet using the market values reported in the table above.

2. What are the updated current ratio, debt structure ratio, debt/asset ratio, debt/equity ratio, and equity to asset ratio?

3. How do the ratios differ between the cost and market-based balance sheet?

4. Discuss the advantages and disadvantages of using a cost and market-based balance sheet.